Comments

The way I do it is to use an amortization calculator (easy to find online) to calculate the time period that goes with the extra payments and just enter different payment information in the mortgage settings for the home. Then compare discretionary spending with what you had before.

Is this really equivalent to paying extra principal? If you make substantial extra payments, won't the interest paid each month be distributed differently, with implications for the tax deduction (i.e., depending on income level and AMT)?

ESPlanner calculates your mortgage rate given the payment data or alternative payment plan you enter and then does the standard compound interest thing to figure out how much of this year's payment is interest. After that the interest gets applied to the federal/state itemized deductions and off we go to the next year. So extra monthly principal payments reduce the overall term of the mortgage and thus save you money on the interest paid, but because you are lowering your principal and have less interest in the following years you'll thus save less on taxes because tax saving is related to interest paid. And you at some point may lose the ability to itemize if mortgage interest is what is pushing you past the standard deduction threshold. I'm not an accountant, but this is how I would understand it.

This is a great package, and your support is always first rate. I do have a financial advisor, but this tool is most reassuring for me as I can play with different scenarios as much as I would like, where he can't......I'll have to show him ESPlanner next time we meet.

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Disclaimer: ESPlanner and all other products provided by Economic Security Planning, Inc. (referred to hereafter as "we" or "our") are educational calculators designed to give you some input in mapping out your financial future, but should not be acted upon as a complete financial plan. MaxiFi Planner and the creators of MaxiFi Planner and any derivative products are not certified, registered, authorized, or any other type of financial planners. ESPlanner and its derivative products are simply tools for helping you think through your economic futures. Any suggestions should be viewed as informative inputs into your own decision-making with respect to saving and the purchase of life insurance. ESPlanner and its derivative products provide neither economic, financial nor tax advice, which can only be delivered to you by authorized professionals. The Social Security benefit estimates produced by ESPlanner are just that -- estimates. Only the Social Security Administration can tell you precisely the benefits to which you will be eligible or are eligible and the amounts you will receive. The estimates provided here may differ from the correct amounts due to mistakes in our computer code of which we are unaware or because of legislated changes in Social Security provisions of which we are unaware or because of delays in our updating our computer code for changes in Social Security provisions. This material is not intended to provide legal, tax or investment advice, or to avoid penalties that may be imposed under U.S. Federal tax laws, nor is it intended as a complete discussion of the tax and legal issues surrounding retirement investing. You should contact your tax advisor to learn more about the rules that may affect individual situations.